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SoftBank acquires 4.5% stake in DT, amid €4.5bn T-Mobile NL sale

Timotheus Höttges 16.9_b5ff27.jpg

SoftBank Group Corp (SoftBank) has formed an equity share swap agreement with Deutsche Telekom AG (DT).

Under the terms of the deal, SoftBank will become a 4.5% shareholder in DT, becoming the second largest private shareholder with intended board representation, and retain its 3.3% equity stake in T-Mobile US. While DT increases its stake in T-Mobile US (TMUS) from 5.3% to 48.4%.

Specifically, DT will acquire approximately 45 million TMUS shares from SoftBank, as part of its call options that were granted by SoftBank in 2020, in exchange for issuing 225 million new DT shares to SoftBank from its authorised capital.

“This is a landmark transaction that is a true win-win-win for our portfolio companies, SoftBank and Deutsche Telekom,” said Marcelo Claure, corporate officer, executive vice president and chief operating officer of SoftBank Group Corp. and chief executive officer of SoftBank Group International.

“The transaction diversifies our telecoms exposure and results in SoftBank becoming DT’s second largest private shareholder, while retaining meaningful exposure to high-growth TMUS. I look forward to partnering with Tim and team long into the future.”

Through the deal SoftBank retains 'meaningful exposure' to TMUS through shares underlying primarily floating options and, potentially, True-up Shares.

In addition, Deutsche Telekom and SoftBank have also inked an agreement whereby Deutsche Telekom will become a key European partner in the SoftBank ecosystem. 

Specifically, SoftBank will partner with DT on joint investments and the expansion into new services, including scaling and investing in global connectivity platforms, with a focus on enterprise customers in areas such as IoT.

“This is a very attractive transaction for Deutsche Telekom and its shareholders to further benefit from the value creation potential in T-Mobile US and beyond," said Timotheus Höttges (pictured), chief executive officer of Deutsche Telekom.

"But we are not just increasing our stake in T-Mobile US – we are welcoming SoftBank as a new key investor and strategic partner for Deutsche Telekom. I am thrilled by the value creation potential of this cooperation for both SoftBank and Deutsche Telekom.”

In relation to the agreement, DT’s management will support SoftBank's proposal to have Marcelo Claure appointed to the Supervisory Board of DT at the next annual general meeting.

In the long-term DT may exercise call options to acquire another 20 million TMUS shares from SoftBank by re-investing $2.4 billion of anticipated proceeds from the announced sale of T-Mobile Netherlands.

The sale of T-Mobile Netherlands (T-Mobile NL) and Tele2 was agreed for €4.5 billion ($5.3 billion) to WP/AP Telecom Holdings IV BV (the Consortium), an entity jointly controlled by funds advised by private equity firms Apax Partners and Warburg Pincus.

The news follows much industry speculation. In July Capacity reported that Five private equity companies were interested in buying T-Mobile NL, among them was Apax Partners, Apollo Global Management, BC Partners, Providence Equity Partners and Warburg Pincus.

It was at the start of the year that we reported that DT was interested in selling T-Mobile NL for between €4 billion to €5 billion.

Once the transaction is completed, Deutsche Telekom will make approximately €3.8 billion ($4.5 billion) in net cash proceeds, after net of proceeds to 25% shareholder Tele2 as well as other debt.

“We have come a long way to reposition T-Mobile NL as a winning player by driving innovation and change within the market, being the first mobile operator to offer Unlimited and nationwide 5G in the Netherlands," said Søren Abildgaard, CEO of T-Mobile NL.

"We believe that T-Mobile NL today is better positioned than ever and as a management team we are excited to partner with Apax and Warburg Pincus to execute the next phase of our growth story.”

The deal is subject to standard closing conditions, including regulatory approvals and consultation with employee representatives.